Conny Wunsch

This paper uses novel linked survey and administrative data for jobseekers in Switzerland to study jobseekers’ skills, potential skill gaps, and their job search behaviour. Based on a realized sample of survey participants that is better educated and has better employment prospect than the overall population of jobseekers, we find that women and older jobseekers are most at risk of lacking digital skills, while low education and little work experience are risk factors associated with lacking professional and interdisciplinary skills. We further document that the willingness of jobseekers to deviate from their last job in terms of skill requirements is relatively low and that they are reluctant to accept wage losses. However, jobseekers with potential skill gaps do tailor their search strategy to their skill profile. Our results provide interesting insights for policy makers and practitioners in the public employment service who seek to support jobseekers in navigating modern labour markets with rapidly changing skill requirements.

This paper shows that gender segregation in the labor market has important implications for the estimation of gender pay gaps. Using Switzerland as an example, we provide evidence that there are sizable segments in the labor market with perfect sorting such that there are no comparable men and women. In these segments, covariate-adjusted gender pay gaps are not identified non-parametrically. Reliability of estimated pay gaps then requires correct functional forms for extrapolation or excluding segments of the labor market with perfect sorting from the analysis. We discuss different estimation choices within this trade-off and show how they affect estimates of unexplained gender pay gaps. We find that enforcing comparability ex ante, estimator choice and functional form restrictions matter greatly. Using a flexible semi-parametric estimator with moderate restrictions on ex ante comparability explains up to 38% more of the raw gender pay gap and results in estimated unexplained gender pay gaps that are up to 44% smaller than standard Blinder-Oaxaca estimates that account for the same wage determinants but ignore lack of overlap.

Article Editorial: Minimum Wages – Experiences of European Countries was published on November 20, 2024 in the journal Jahrbücher für Nationalökonomie und Statistik (volume 0, issue 0).

The generosity of social insurance coverage often increases with the beneficiary's age and their contribution time to social security, but existing policies vary considerably. We study the differentiation of unemployment insurance (UI) generosity by evaluating how the insurance-incentive trade-off varies with age and contribution time. We exploit numerous discontinuities in potential benefit duration in Germany. Contribution time in the last three years carries information on job search efforts, as it is associated with lower moral hazard responses and fiscal externality. We find no signicant response heterogeneity in age or longer contribution time horizons. Contrasting these gradients with an approximated insurance value for four UI regimes, we document that steepening the potential benefit duration schedule in contribution time and attening it in age would have increased welfare.

This study evaluates the macroeconomic effects of active labour market policies (ALMP) in Germany over the period 2005 to 2018. We propose a novel identification strategy to overcome the simultaneity of ALMP and labour market outcomes at the regional level. It exploits the imperfect overlap of local labour markets and local employment agencies that decide on the local implementation of policies. Specifically, we instrument for the use of ALMP in a local labour market with the mix of ALMP implemented outside this market but in local employment agencies that partially overlap with this market. We find no effects of short-term activation measures and further vocational training on aggregate labour market outcomes. In contrast, wage subsidies substantially increase the share of workers in unsubsidised employment while lowering long-term unemployment and welfare dependency. Our results suggest that negative externalities of ALMP partially offset the effects for program participants and that some segments of the labour market benefit more than others.

We investigate whether informal support is sensitive to the extent to which individuals can influence their income risk exposure by opting into risk. In a laboratory experiment with slum dwellers in Nairobi, we measure subjects’ transfers to a worse-off partner under both random assignment, and self-selection into a safe or risky project. Our experimental design allows us to discriminate between different possible explanations for why giving behaviour might change when risk exposure is self-selected. We find that solidary support is independent of the partners’ choice of risk exposure, which contradicts attributions of responsibility for neediness and ex-post choice egalitarianism. Instead, we find that support depends on donors’ risk preferences. Risk-takers seem to feel less obliged to share the profits they earn from their choices compared to subjects who earn equally high profits by pure luck. Our results have important implications for anti-poverty policies that aim at encouraging risky investments.

The vast majority of existing studies that estimate the average unexplained gender pay gap use unnecessarily restrictive linear versions of the Blinder-Oaxaca decomposition. Using a notably rich and large data set of 1.7 million employees in Switzerland, we investigate how the methodological improvements made possible by such big data affect estimates of the unexplained gender pay gap. We study the sensitivity of the estimates with regard to i) the availability of observationally comparable men and women, ii) model flexibility when controlling for wage determinants, and iii) the choice of different parametric and semi-parametric estimators, including variants that make use of machine learning methods. We find that these three factors matter greatly. Blinder-Oaxaca estimates of the unexplained gender pay gap decline by up to 39% when we enforce comparability between men and women and use a more flexible specification of the wage equation. Semi-parametric matching yields estimates that when compared with the Blinder-Oaxaca estimates, are up to 50% smaller and also less sensitive to the way wage determinants are included.

Negative income shocks can either be the consequence of risky choices or random events. A growing literature analyzes the role of responsibility for neediness for informal financial support of individuals facing negative income shocks based on randomized experiments. In this paper, we show that studying this question involves a number of challenges that existing studies either have not been aware of, or have been unable to address satisfactorily. We show that the average effect of free choice of risk on sharing, i.e. the comparison of mean sharing across randomized treatments, is not informative about the behavioural effects and that it is not possible to ensure by the experimental design that the average treatment effect equals the behavioural effect. Instead, isolating the behavioural effect requires conditioning on risk exposure. We show that a design that measures subjects preferred level of risk in all treatments allows isolating this effect without additional assumptions. Another advantage of our design is that it allows disentangling changes in giving behaviour due to attributions of responsibility for neediness from other explanations. We implement our design in a lab experiment we conducted with slum dwellers in Nairobi that measures subjects’ transfers to a worse-off partner both in a setting where participants could either deliberately choose or were randomly assigned to a safe or a risky project. We find that free choice matters for giving and that the effects depend on donors’ risk preferences but that attributions of responsibility play a negligible role in this context.

In this study we experimentally investigate whether solidarity, which is a crucial base for informal insurance arrangements in developing countries, is sensitive to the extent to which individuals can influence their risk exposure. With slum dwellers of Nairobi our design measures subjects’ willingness to share income with a worse-off partner both in a setting where participants could either deliberately choose or were randomly assigned to a safe or a risky project. We find that only a subgroup of subjects reduces willingness to give when risk exposure is a choice. Responses are limited to donors in the risky project, whereas donors in the safe project do not adjust their willingness to give. This difference in behaviour can be explained by differential giving in the absence of choice. Lucky winners with the risky project show a particularly high degree of solidarity with unlucky losers compared to donors and partners assigned to the safe project when they face risk for exogenous reasons. The possibility of free project choice removes these differences in generosity and we show that this is driven by attributions of responsibility for neediness. Our results suggest that crowding out of informal support might be less severe than suggested by the studies from Western countries and the evidence on formal insurance from developing countries.